Land transfer tax: What's next after resounding defeat on Nov. 6?

After the General Assembly gave counties the go-ahead in August to enact—with voter approval—a 0.4 percent transfer tax on property sales, WakeUP Wake County Vice Chair Stan Norwalk attended a meeting of the N.C. Association of County Commissioners. The message of the day, Norwalk recalls, was "don't go too fast"—meaning don't rush to the ballot with a transfer-tax referendum before selling the public on the need for it.

In subsequent weeks, Wake, Durham and Orange counties opted to hold back until 2008 or later. But fast-growing Chatham County pushed ahead, anxious to start banking the estimated $2.5 million anticipated annual net gain—85 percent of which its commissioners have pledged to spend on school construction. On Nov. 6, Chatham voters pushed back, defeating the transfer tax by a whopping 70 percent to 30 percent.

Chatham wasn't alone. All 16 counties seeking voter approval for the transfer tax (out of North Carolina's 100 counties) saw it rejected by majorities at least as big as Chatham's. Eleven of 16 counties proposing a 0.25 percent sales tax increase—an alternative also permitted by the General Assembly this year—watched it go down as well.

The wipeout was fueled by an anti-tax coalition led by the N.C. Association of Realtors and the N.C. Homebuilders Association, which together reported spending almost $1 million to defeat the transfer tax; joining them were conservative groups such as Americans for Prosperity and the John Locke Foundation, which cranked up their publicity efforts against both taxes.

On the other side—well, there was no other side, Norwalk says. The counties themselves weren't allowed to promote their initiatives, only "explain" them. And in some, the county commissioners themselves were opposed. Meanwhile, citizens groups like WakeUP, which pushed for the transfer tax during the legislative session, weren't raising money and got little publicity.

Contrast those results with what happened on Election Day in Charlotte (Mecklenburg County). There, voters gave a resounding 70-30 percent vote of confidence to their half-cent sales tax for transit, rejecting an anti-tax coalition's campaign to repeal it. The big difference: Charlotte's Vote Against Repeal Committee raised $600,000 to tell voters what the tax was for.

So did Chatham County Commissioners, under progressive leadership since 2006, make a mistake? One leader of the Chatham Coalition, a grassroots citizens group, thinks so. In a note circulated on the pro-tax side, Chairman Jeffrey Starkweather called it "a colossal political blunder," in part because the big anti-tax turnout in Pittsboro helped sink the progressive Pittsboro Together trio of town council candidates. Starkweather couldn't be reached for comment.

Chatham Commissioner Mike Cross, for years a transfer-tax proponent, disagrees. "Chatham led the fight to get the tax," Cross says. "Then we were supposed to turn around and say, but we didn't need it so bad that we can't wait another eight or nine months? I don't think we could've done that."

In fact, Cross and other Chatham leaders are talking about trying for the transfer tax again as soon as the May 2008 primary election.

"It's not like the needs are going away," Cross says. "The people who are moving here in big numbers expect us to have schools ready when they arrive—I don't want to get into the shape Wake County got into."

He was referring to Wake's crowded schools, where 20,000 kids attend classes in trailers.

With the transfer tax, Wake County would raise an estimated $44.8 million a year, according to NCACC. The 0.25 percent sales tax would generate $27.9 million. (One or the other is allowed, not both.) The comparable figures in Durham: $9.8 million or $9.2 million. In Orange: $4.1 million or $3 million.

Norwalk thinks the best chance for the transfer tax now is a coordinated, Trianglewide campaign that spells out school needs county by county, as well as the options should the tax question fail. "Bad option number one, higher property taxes," he says. "Bad option number two, schools services decline.

"This issue needs to be fought on a regional basis," Norwalk says. "Otherwise, individual counties will be picked off again, one at a time."